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tv   On the Money With Maria Bartiromo  CNBC  June 9, 2013 7:30pm-8:01pm EDT

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welcome to "on the money", the markets on edge, worries about the economy and the fed. big new data is out. what does the jobs report mean for your portfolio? the search for prosperity and my conversation with meredith whitney. a marketing maven from a a cereal ad, "on the money" begins right now.
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here's a look what's making news as we head into a new week on the money. the anticipated may jobs report came in better than expected. 175,000 new jobs led by the retail services sector but the unemployment rate rose slightly to 7.6%. economists are saying that may be a good sign because more people are entering the labor force as the economy strengthens. job creation for the previous two months was revised downward by 12,000. it was a wild week on wall street, the dow avoiding first three-day losing streak on thursday. on a huge late day rebound, erasing a triple digit loss. a sign of strength in america's economy, may auto sales show ford with an increase of 14%. gm up 3% and toyota up 2.5%. the industry on track to sell more than 15 million vehicles this year for first time since
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2007. dora the explorer and spongebob squarepants have a new home. they will move to amazon.com from netflix. part of a new licensing deal, from the parent of nickelodeon. >> now the big number everybody has been waiting for, the jobs report is out. joining us to talk about what it means, karen finerman, and author of the new book finerman's rules, also diane swonk, chief economist with mesirow capital. >> diane, let's talk about the jobs numbers out friday, the economy created 175,000 jobs for the month, that's slightly better than expected even though the unemployment rate is up slightly to 7.6%. >> it was better than expected but the month of april was revised down. we've seen in a broader -- for the broader economy is that job growth has grown from 207,000 a
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month for six months ending at the fourth quarter and beginning of the year to now about 150,000, north of that. that's well below what the fed considers a healthy threshold. we've seen a moderation in growth. the composition of job gains still heavily concentrated in part-time sector, low wage jobs, retail sector. we saw no increase in average hourly earnings. >> the quality is not really where you want it. karen, what does the jobs report tell us about investing in the markets and economy today? >> i like it was in the middle of the fairway, we're wondering is good news bad news and vice-versa. i'm thinking, we're long focused fund. one of the things that's been helpful is the lack of correlation we saw a year or two ago as fundamental stories started to evolve and earnings were what matters. now i'm a little bit nervous we're starting to see these macro events very scary, japan
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may be somehow -- the volatility is gigantic. is it out of control? i don't know. that makes me a little nervous combined with the idea of, all right maybe the fed will start tapering and we got just a hint of what that might look like, which is also scary, so that actually makes me a little less optimistic. >> you want to take money out of stocks? >> i want to be buying protection. i'm still long but spending money on protection. >> diane, what about you? what do you think in terms of the federal reserve? we have the fed releasing the beige book and added modest to moderate growth. what does that tell you in terms of when the fed may start the winding down of the stimulus and does that impact the markets? >> this is really important, it's been overblown in the marketplace, the fed is considering as early as september in tapering, i think
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we we do see the head winds seep in the data, the bulk of the cuts over the summer will continue like lie into 2014, that could dampen the overall economic situation. as the fed tapers, they'll still continue to add. you have to think of it as a calibration. when qe2 came out it was 600 billion. by the end of june we'll exceed that in qe 3 and could see the fed even though it tapers continues to buy for some time to come because of the mediocre growth we're seeing out there. >> nonetheless, tapering is going to happen at some point in terms of buying lower numbers of bonds, smaller stimulus. does that impact the stock market? that still -- even though it's not -- the fed is out of the way 100%, does that send the stock market into a sell-off? >> i don't know if it sends it into a sell-off or not, but the real concern is the competition
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between monetary stimulus and fiscal drag. we would like them to be complimentary, physical stimulus and monetary stimulus at the same time. the fact they are competing with each other is part of the reason we're seeing the volatility out there as well. >> it feels like the conversation has changed. has the sent. s and momentum shifted? are we looking at the market that's going to be stable to down as opposed to hitting new highs? >> i think so but i still think there's value and that's what we search for. i think it used to be don't fight the fed, don't fight the fed. now the fed at some point will start to have a different tone. >> karen, in your book you say women themselves are the biggest obstacles that we face. what do you mean by that? >> it's a few different ways. often women are uncomfortable with the idea of being ambitious and women often are not their
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own best champion. and one of the things that's actually relates to investing that is really interesting about women, there was a conversation with a male hedge fund manager, why don't you have any women analysts on your team? you know, i have pay limited amount of capital. when a guy comes in, he tells me how much we can make on a story, investment idea. when the woman comes in, she talks about all of the things that could go wrong and all of the risks. i have this limited amount of capital to deploy. i fall for the upside every time. as soon as he said it, i realized, i know what he's talking about, women do present things that way. my team is mostly women so i'm used to that sort of style but i think sometimes women being risk adverse sometimes don't put themselves out there enough and take enough risks. if you're in the investment management business the way you move up is by getting investment ideas on the sheets and having them works. if you don't get them on pt
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sheets, you can't move forward. >> great appreciation. we appreciate it. up next "on the money", investors around the world still hoarding cash in spite of a stronger stock market? what two bank ceos told me about risk averse. the analyst who made the call in the banking crisis, meredith whitney joins me on the math of prosperity. >> the cards were laid out and i called it as i saw it. i wasn't looking to make my career on doom and gloom. [ larry ] you know throughout history, folks have suffered from frequent heartburn but now, thanks to treating with prilosec otc, we don't have to suffer like they used to. [ bell dings ] ♪ [ horse whinnies ] getting heartburn and then treating day after day is a thing of the past.
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welcome back. in spite of the recent record highs for the u.s. equity
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market, many investors remain risk adverse, keeping their cash out of the market. ceo of the second largest bank told me this year the head of the swiss bank ubs is the latest in the string of ceos to describe a high level of caution. >> remains absolutely -- i would describe it almost paralyzed and very high level of cash balances and this has been the case for the last seven quarters. >> it's been a long time, even though we're seeing the market hit record after record, they are still nervous and sitting on cash. >> the higher it goes the more nervous people get and frustrated. >> he also cited the need for a long-term resolution to the exit from quantity tif easy. >> how would that impact the economy? how sustainable is the recovery we've seen in the last few quarters? that's going to be the test that
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investors will want to see. this contrasted with the more optimistic view anschu jain. >> we're calling for an end to the buy buying program, maybe happening soon, the end of 2013, first quarter 2014. >> jain indicated it has been a game changer for the financial services industry. >> there's no doubt every aspect of our business model and capital ratios are being scrutinized on the subject of regulation, i'm more concerned about the potential -- than i am about the quantum of regulation. let's be fair, 2008 was a very, very difficult time for the entire world, not just financial services. the need for reform cannot be debated. for us it goes a long way to address capital, liquidity and so on and so forth. i would really say a unified
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approach would be the one that would best serve all parties. >> a unified approach but you can't have a global standard. you can't have one standard across the world for the major financial institutions? >> why not. >> okay. >> here in the u.s. it wasn't just consumers and banks who binged on debt but state and local governments as well. whitney's latest warning says the fiscal sins are forming the u.s. economy, state by state. i spoke to the woman known for making bold calls. >> i care about the numbers being right and it's the numbers that give me the confidence to make the calls, it's clear math. >> meredith's 2007 prediction that the mortgage mltdown spelled disaster for the wall street industry, she's on the map again describing a significant redistribution of american prosperity, in her new book "the fate of the states". >> your name became snon mus with doom and gloom.
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what was that like? >> i never looked for the worst in situations, that was a moment in time where really the music stopped just miserable moment in time in financials and i called it as i saw it. i wasn't looking to make my career on doom and gloom. i made my career finding growth opportunities and that's much more interesting. >> why did you write the book? >> i thought it was important for everybody, all americans to understand what's at stake here with local, even at home because it matters to people reliant on local education systems and local public safety, so much within the system that is sacrificed when budgets are out of whack. >> you breakdown the fiscal challenges throughout the united states, where are america's emerging markets? >> i plook at the rest of the world. when somebody talks about high single digit teens type growth compared to the u.s., gdp at 2%.
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when you look at other parts of the world, it's exciting. we have it at home. you look at texas, louisiana, north dakota, up to the central corridor, you see high single digits and double digits growth inside the united states. who would have thought we would have so much prosperity at home. >> what is the methodology you're looking at, unemployment, commodities? what's the methodology behind this. >> every 50 or 60 years the map changes in terms of where the economic prosperity is and look at the manufacturing economy, the result best and the housing economy it was the sun belt. right now you're getting into a different type of economy that's going to be fueled by no pun intended by cheap energy. the average debt per capita in california is twice that of the average debt per capita in texas, not only that, but the unemployment rate in texas is
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dr dramatically lower. they are spending faster. it shouldn't be a surprise in the central corridor the rate of spending growth is growing 30% faster than that of the coast. >> whitney's thought locally before on 60 minutes she predicted defaults of local governments totalling hundreds of billions of dollars. it sparked fear in the munibond market made up significantly of individual investors. >> do you regret being so specific? >> i don't think that was specific at all. i tried to size the -- what i thought the impact would be and i said hundreds of billions. i absolutely gave no timetable around that. my intent was certainly never to scare people but raise attention to issues that are so important to americans. a taxpayer shouldn't be constitutionally subordinate to a pensioner or bond holder. effectively the taxpayer is
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because the taxpayer is the one who ends up get being less services and paying more. i don't quite get why a bond payment is more important than a child's education. >> what's the status of the states today? do you still think those states that are burdened by dewill see heavy amount of default? >> i think this is a long term problem that needs on addressed. i hope it's addressed sooner than crisis comes. there's been talk about state revenues improving, particularly california, state revenues always improve after you raise taxes but that's a one time event. >> how do you feel about the economy and markets today? >> you have sections of the economy that are growing high single digit low double digit levels then you have parts of the economy, large state drive of the economy, california is struggling so deeply. it's really a tale of two economies. >> my thanks to meredith
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whitney. up next, a new cheerios ad sparking major controversy online. what makes viral video contagious and what it means for the businesses aiming to attract dollars. we're back in a moment. when visa signature asked everybody what upgraded experiences really mattered... you suggested luxury car service instead of "strength training with patrick willis." come on todd! flap them chicken wings. [ grunts ] well, i travel a lot and umm... [ male announcer ] at visa signature, every upgraded experience comes from listening to our cardholders. visa signature. your idea of what a card should be.
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buzz. how can businesses jump in on pt action and profit from going viral. author of "contagious" why things catch on and the wharton school. it's a great topic. why do you see the cheerio's ad on jc penny teapot. what is the secret? >> it's not luck and not chance. it may seem that way. those two, for example, have a lot of controversy, whether it's saying the teapot looks like t hitler if you squint the right way. some people still in america think that's a problem apparently and some people agree or disagree and fight about it and that gives it a reason to be shared. >> do you think companies do the viral ads on purpose? they want to tap into the social media and want a social response? >> i think many companies now are fryitrying to make videos t
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go viral. i don't think jc penny or cheerios wasn't trying to get this much attention. >> has there been a bad viral video or story that severely hurt a company, either in terms of its stock price or sales or reputation? what can be done if that happens? >> there have been a number. you might remember a few years ago domino's pizza got in trouble when employees were filmed putting cheese up their nose and sneezing on a sandwich. people were disgusted and no one wanteded to go to dominos. same with united breaks guitars. a guy comes up with a song about it gets hundreds and millions of views and united's share price drops $180 million based on the view. the sharing could have a big impact on bottom line. >> what can a business do to get
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videos and products out there, get a better chance of going viral but in a positive way? >> definitely good question. there are a number of key scientist drivers of sharing, people share things that make them look good, for example, something makes us look smart or in the know or special like an insider, we're going to tell everybody else or rebecca black's friday, people viewed that more on friday. big spike in attention on that day of the week because it reminds them that video exists. it's not luck or chance. >> how important is it? what does going viral mean for the bottom line? >> well, actually, if you look at the research, it shows word of mouth is ten times as effective as traditional advertising, we don't listen to ads anymore. we will pay attention to our friends because we know they have our best interest at heart. if companies can figure out how to use the word of mouth, they can find out ways to be more popular. >> what are your predictions for
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the summer. >> you see a lot of things trending, tesla is really an exciting brand that has come out with an electric roadster, very high end, not cheap, if you look among folks in the know they are excited to show off that status. >> i took a test drive and it was spectacular. i don't think he would have initially gone for it, to buy this car, once you're behind the wheel you see what a tight right it is and no gasoline, it's amazing. >> it also feels neat to have a car not everyone else has. not another bmw or mercedes, you have something that's a little different. >> it's special. >> great to have you on the program. >> thanks for having me. >> up next, a look at the news that will have an impact on the money. how paychecks of your favorite athletes measure up? who's going straight from the field to the bank you ask? we'll tell you. it starts with little things. tiny changes in the brain.
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for more on our show, check out the website, otm.cnbc.com. on monday, the senate will debate the immigration reform bill, which will offer a path to citizenship for 11 million undocumented immigrants. on wednesday the treasury department will release a monthly account of the surplus or deficit of the federal government. on thursday, the retail sales report will be out giving us a window into the consumer activity and the producer price index will be reported on friday. and on friday the irs will shut
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down for the day due to the sequester. and what superstar athlete has the biggest take home pay? forbes released the highest paid sports personalties this week, tiger woods, back on top from 2001 until falling out of first last year. woods made more than $78 million in 2012, including $65 million in endorsements alone. rounding out the top five, roger federer, kobe bryant and lebron james and drew brees, all among the top earners. that will do it for us for today. thank you for joining me keep it right here where we are "on the money." i'll see you next weekend. [ male announcer ] citibank's app for ipad
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